Flipkart buys back $350 mn worth shares

04 May, 2018, 12:57 | Author: Manuel Hopkins

In a huge merger on Thursday, reports suggest that U.S. retail giant Walmart Inc has signed a deal to acquire 73% of controlling stakes of Indian e-retail company Flipkart - a deal that will likely prompt the exit of Flipkart's co-founder Sachin Bansal.

A $20 billion valuation for Flipkart would be substantially higher than the $12 billion mark it hit a year ago.

Reuters reported in February here that it was in talks to purchase a stake of over 40 percent in Flipkart, which is backed by the likes of SoftBank Group, Tiger Global, eBay, Accel Partners, Naspers, Tencent Holdings and Microsoft Corp.

The goal of the move is to regain its status of a private limited company in Singapore ahead of investment by Walmart. The deal is expected to close within 10 days, though terms could still change and a deal isn't certain.

The deal with Walmart, involving primary and secondary shares, is expected to value Flipkart at about United States dollars 20 billion, they added.

People familiar with the negotiations told TOIWalmart wants to retain only one of the two founders as they fine-tune the deal.

American department store Walmart may well be facing competition from Amazon in its bid for majority ownership of Flipkart, Amazon's biggest rival in India.

Two years ago, Amazon already approached Flipkart with an offer ultimately deemed too low for a 51 to 55% stake in the company.

The deal is not likely to go through as it could result in close scrutiny as the merged entity would have the major share of growing online retail market. The world's largest retailer has struggled against Amazon as consumers increase their spending on the Internet. Flipkart, Walmart and Google didn't immediately respond to requests for comment. The US retail conglomerate is tipped to spend at least $14.6 billion, and as much as $16 billion, in the cash-and-stock buyout of the Indian e-commerce company. Founder Jeff Bezos has committed $5.5 billion (roughly Rs. 36,800 crores) to the country and his local chief, Amit Agarwal, has made progress by adapting the site to local conditions.

However, citing resources, the report said that Binny Bansal might stay in the firm after the Walmart takeover.

Walmart is now seeking a bigger stake than previously expected.

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